Ask HN: Why has the price of Bitcoin dropped from $19,000+ to $14,000?

I'm sure you will come across many answers and there are in fact many different explanations, but at the end of the day, the real answer is "Nobody knows".

While each transaction is 100% visible, nobody knows the motivation behind each money flow since you can't identify the owner of the transactions easily.

I would like to think it's because "the majority of the people trading Bitcoin nowadays are idiots who see it as an equivalent to stock market or gambling", but I (nor anyone else) have any evidence to back this up.

You could also think that "it's actually because Bitcoin is failing to scale and people are becoming skeptical", but again there is no evidence that the majority of the money moving around is caused by well educated people who truly realize how unscalable the Bitcoin blockchain is.

You could also think that the price is going down because the whole premise of "Bitcoin being scarce resource" is not true anymore due to all the altcoins rising. But again, there is no evidence.

You could also think that it's caused by wall street bankers who are trying to short it. But again, there is no evidence.

Without any evidence, it's foolish to base your financial decisions based on these hypotheses so the best answer should be "Nobody knows". I've learned that thinking this way is the best when dealing with cryptocurrency.

Because that's what people are buying and selling Bitcoin at.

The Bitcoin market functions like any other market. There are people who come in and say "I am willing to buy Bitcoin at $13,000", while others say "I'm willing to sell Bitcoin at $15,000".

This disagreement between the two parties is called the "bid-ask spread". There is ALWAYS two prices. In this toy example, the bid-ask spread is $2000 (I've made up numbers to exaggerate the effect, and make it easier to think about). Even Stocks have a bid-ask spread (although its common measured in pennies). It doesn't matter, if people are buying and selling things... whether it be houses, stocks, bitcoins, currencies, bonds... there is always a Buyer and a Seller, and initially at least, they disagree about the price. (The buyer always has a starting bid at a value lower than the seller is asking for)

The "last value" that has been traded (which is when a buyer 'gives in' and buys at what a seller is "asking" for... or when a seller 'gives in' and sells at what a buyer is "bidding"), is what is reported. And that just changes all the time.

Short term market prices of a security are strongly a function of psychology. People see a graph, lines, and numbers and internally decide that's the price of a good.

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For more "realistic" number of Bitcoin's market depth, keep an eye on market depth charts. It provides way more information on "why" the price has settled down on a particular value.

https://bitcoincharts.com/markets/bitstampUSD_depth.html

At the moment, with a BTC order of ~1BTC, the bid/ask spread is roughly $100. We see that there are a lot more Bids at the $14000 mark, probably because its a "nice round number" and humans like to bid in round numbers. There aren't any round numbers on the Ask-side, so the market liquidity upwards is a bit shallower.

My reasons:

* There's always been volatility with bitcoin. This isn't new.

* The higher price was inflated by new investors/adopters

* End of year, people taking profits out to spend / tax reasons

* Bitcoin became unusable with high fees and network slowness

* Bitcoin cash challenged Bitcoin combined with insider trading. Since all cryptocurrencies dropped, this point might not be that relevant

There are many possible reasons but I'll just list three. (1) Pump and Dump schemes. The industry is unregulated so any money making tactic, even unethical is not illegal.

(2) Roger Ver (Bitcoin Jesus) just said "Insider Trading Is a Non-Crime". He was speaking of the recent insider trading allegations against Coinbase insiders who may have traded bitcoin cash early and leaked info. This news reduces confidence of ordinary investors.

(3) It's a young market and this is normal shakeout. Bitcoin "crashed" at least 6X in 2017. Each time was predicted as "the bubble burst". And each time it has roared back even stronger.

So it your strategy is HODL, this is part of the business cycle.

I noticed something interresting. Bitcoin price almost precisely follows how much it is trending:

https://trends.google.com/trends/explore?q=bitcoin

As you can see, the media hype is wearing off, less people are getting involved with bitcoin.

I guess there is really more reasons, like BCH insider controversy, people getting involved with other cryptos like XRP (Which seems to be the new trending coin)

Some would say, "Whales splashing around."

Some would say, "It's a manipulated market."

I would say, "Oooh la la, cheaper BTC, tres bon!"

1) Due to the fact the government is going to tax cryptocurrency trading, pre-emptive sells

2) Speculation: negative cases

3) Fees increasing to trade BTC

Coinbase/Ver shenanigans and slow holiday markets most likely “reasons.”